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Commercial Paper

Types Of Commercial Paper, Negotiability, Endorsements, Liability Of Parties, Secondary Liability, Holders



A written instrument or document such as a check, draft, promissory note, or a certificate of deposit, that manifests the pledge or duty of one individual to pay money to another.

Commercial paper is ordinarily used in business transactions, since it is a reliable and expedient means of dealing with large sums of money and minimizes the risks inherent in using cash, such as the increased possibility of theft.

One of the most significant aspects of commercial paper is that it is negotiable, which means that it can be freely transferred from one party to another, either through endorsement or delivery. The terms commercial paper and negotiable instrument can be used interchangeably.



Since commercial paper constitutes PERSONAL PROPERTY, it is transferable by sale or gift and can be loaned, lost, stolen, and taxed. Commercial paper is a specific type of property primarily governed by article 3 of the UNIFORM COMMERCIAL CODE (UCC), which is in effect in all 50 states, the District of Columbia, and the Virgin Islands. Although Louisiana has not enacted all the articles of the UCC, it has adopted article 3.

CROSS-REFERENCES

Bonds; Documentary Evidence.

Additional topics

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